ABSORPTION.

Auckland Star, Volume LXII, Issue 95, 23 April 1931, Page 7

ABSORPTION.

PLAN SUPPORTED. Business Taken Over by Federal Bank. - UNDER STATE GUARANTEE. (United P.A.—Electric Telegraph—Copyright) (Received 10.30 a.m. i SYDXEY, this day. A summary of -.the proposals put forward by the Commonwealth Bank Board for affording temporary relief to New South ales Government Savings Bank depositors in necessitous circumstances are announced. They include that the Government" Savings Bank shall hypothecate to the Commonwealth Bank such securities as the latter may require to cover such advances as may be made to depositors. The Commonwealth Bank shall be expressly made a preferential creditor in respect to such advances. That upon production of depositors' passbooks to the Government Savings Bank all sums paid to depositors, together with interest and other charges, shall be'repaid to the Commonwealth Bank. That the Xew South Wales Government shall guarantee all advances so made on behalf of the State Savings Bank. The Premier. Mr. Lang, announces that these proposals have been approved. Mr. Lang also announces that when Parliament resumes on Tuesday next emergency legislation will be passed without delay, to give effect to the Commonwealth Bank's proposals to enable that institution to make advances to depositors in the Government Savings Bank who desire temporary relief. It is expected that the Government Savings Bank will be reopened in about three weeks' time. Meanwhile the necessary arrangements will be made for the absorption—not the amalgamation —of the Government Savings Bank by the Commonwealth Bank. The Premier has used the word "amalgamation" on all occasions, but the president of the bank has made it clear that the negotiations with the Commonwealth Bank are for the absorption of the Government Savings Bank. For weeks past the movement of credits has comprised largely the transfer of depositors' accounts to the Commonwealth Bank from the State institution, which has caused a marked augmentation in the funds of the Commonwealth Bank. Mr. Lang stated that the necessary legislation for handing the State Savings Bank over to the Commonwealth would, if possible, be carried through all stages on Tuesday. Mr. Scullin announced in the Federal House of Representatives that the Commonwealth Bank Board had decided to assist the Government Savings Bank in New South Wales, and great relief was expressed by Mr. Latham and Mr. Lyons, who congratulated the Commonwealth Bank. "FROZEN" ASSETS. STATE BANK'S POSITION. (Received 11 a.m.) SYDNEY, this day. An examination of the State Savings Bank's position discloses that accompanying the persistent withdrawal movement there was an increasing "frigidity" in the bulk of the securities held over as cover for a portion of its liabilities. Its holdings in New South Wales Government stocks last June amounted to £30,382,907. Political and economic factors intruded and it became impossible to liquidate such assets freely without undesirable results. The bank, therefore, is in- possession of a large portion of its assets in a more or less frozen form. {

Its advances for homes totalled nearly £11,000.000. and the money at short call is £17,000,000, which is well above the statutory requirements.

POLITICAL ASPECT.

SYDNEY PRESS COMMENT

(Received 11.30 a.m.) SYDNEY,, this day. The "Sydney Morning Herald," editorially, says that Mr. Lang returns from his tour of the southern States, where he was on a campaign to spread his mad doctrine of repudiation as a means of recovering prosperity to find a grim Nemesis awaiting Mm in his own State. The people have revealed in a most striking manner that they had no confidence whatever in his disastrous course, and the crisis which has descended on the great institution in which the people trusted their savings to the State's use, is the most telling denunciation possible of the Lang Government by every depositor, even to the smallest.

Mr. Lang must resign and the State must secure a stable Government with the least possible loss of time. Only by such action can the public confidence be restored.

The ''Labour Daily" says that the unscrupulous enemies of the poor people and the Lang Labour Government at last, by employing the most cowardly and despicable" means—barefaced lying—have succeeded in ••losmc the doors of the Government Savings Bank of };cw South Wales. The future of the bank and the disposal of the people's money are problems of the morrow.

Unfortunately they are problems which, because "of the chance of circumstances, are in the hands of people who have proved that they will stop at nothing to serve their political or financial ends. It is no use glossing the fact that the crisis is the most serious in 40 years of our banking history.

DRASTIC ECONOMY. Sydney City Council Facing Huge Deficit. STAFF REDUCTION. (Received 11 a.m.) SYDNEY, this day. A drastic scheme of economy, involving the retrenchment of several officers and the rationing of employees in the civic service, has been decided upon by the Reform aldermen of the Sydney City Council, which is faced with a deficit of £100.000, with a £1,000,000 loan maturing in London on August 1.

The council is forced to explore-every a*en<ne -jo-^Bdnce-expenditure